401k madness

I need to get emergency money out of my 401k plan. It's like getting blood from a rock. The tax penalties and I don't even know if I can get it approved yet. I'm in a hospital right now and I need that money. It's my money! I I know,it's for retirement,(supposedly) but really, I don't think I'm ever going to retire anyway. I have nothing else to do but work.

But I'm in a situation now that is medically dire and I need that money. I have no family to help me with the money. I'm very very angry so that's why I put this in the rant section. Why do "they"make it so hard? (rhetorical) but dammit, I possibly could die if I don't get the help I need. And again, IT'S MY MONEY!

Oh I'm so pissed. Just give me my damn money I've earned over the past 16 years. Don't make me go through hoops and don't bloody tax me on my own money. Maybe I'll just stop contributring the the 401k plan. THat way my paychecks will be bigger and I will have my own money.

I'm alone and trying to work this stuff out and I'm getting incredibly frustrated at the whole mess. Maybe it's not even worth it.

Is the 401k a scam? What do others think about it? I really would like to know. I was told it's a "good" thing but why wait till retirement if you despertately need that money before retirement age? I'll read and respond to any replies later. My computer time is limited. Thanks for reading. But seriously, is 401k a scam of some type? Who is getting benefitted from it? I mean who in the Gubment? Where is MY money going that I can't access? I really would like people's opinions. And just FYI, insurance doesn't pay for this.

reply to post by Beldy

But seriously, is 401k a scam of some type?

the 401k plan is based on one of the most well recognized scams that there is ...
stealing/ scamming money from retirees.

a well known version of this is when home repair contractors take advantage of the elderly. i do it all the time. (kidding, they're ornery old coots when it comes to money!)

in a unique twist, wall street got together with washington d.c. and came up with a way to steal the money of retirees before they retire.

i hope this makes you feel better, oh uhh ... i mean i hope you get better soon!

The Obama death panel may have already decided your life isnt worth saving. Just not economically feasable.

That's our future anyway...

reply to post by Beldy


I've emptied out my 401k and bought silver and food. Anyway, you can take a hardship withdrawal, you can take out a loan or you can take out a standard withdrawal. In order to do this you must be fully vested, and I guess that you are after 16 years. I have Fidelity and they make it very easy to get money out of a 401k. Who do you have?

I'd say that before the economic unreality of modern times began ...starting about 2006/2007, 401k's were an outstanding idea and particularly if someone can leave it set without question for the entire period. Many employers had matching funds into 401k's as well, which was literally free money to help compound the money over time.

Then the whole system of what makes sense turned upside down and I wouldn't touch one for anything. The problem is, it's a good thing only because the people holding your money can invest and re-use it for a certain period of years...without doubt. So they're gonna make it hurt to about a 40% loss by the time it's all over, to get it.

In normal times, I think they make people good retirement money, but always...always..because someone higher up the food chain is making even more.

Originally posted by Wrabbit2000
I'd say that before the economic unreality of modern times began ...starting about 2006/2007, 401k's were an outstanding idea and particularly if someone can leave it set without question for the entire period. Many employers had matching funds into 401k's as well, which was literally free money to help compound the money over time.

Then the whole system of what makes sense turned upside down and I wouldn't touch one for anything. The problem is, it's a good thing only because the people holding your money can invest and re-use it for a certain period of years...without doubt. So they're gonna make it hurt to about a 40% loss by the time it's all over, to get it.

In normal times, I think they make people good retirement money, but always...always..because someone higher up the food chain is making even more.

The only good thing about a 401k is the employer match, because as you said, it is free money. Other than that, the actual investments and funds that most 401s are invested in are not of the highest quality. it is for this reason that I tell people to close or roll over their old 401s when they leave a job

Originally posted by tinhattribunal
reply to post by Beldy

 

the 401k plan is based on one of the most well recognized scams that there is ...
stealing/ scamming money from retirees.

a well known version of this is when home repair contractors take advantage of the elderly. i do it all the time. (kidding, they're ornery old coots when it comes to money!)

in a unique twist, wall street got together with washington d.c. and came up with a way to steal the money of retirees before they retire.

i hope this makes you feel better, oh uhh ... i mean i hope you get better soon!

Really. I wonder how far the stock market would plunge if all 401k funds were removed today...

Originally posted by OptimusSubprime
reply to post by Beldy

 

I've emptied out my 401k and bought silver and food. Anyway, you can take a hardship withdrawal, you can take out a loan or you can take out a standard withdrawal. In order to do this you must be fully vested, and I guess that you are after 16 years. I have Fidelity and they make it very easy to get money out of a 401k. Who do you have?

This is spot on. You can choose to not pay taxes out of your early deduction and when you file for the 2013 year you will get a waiver on tax if you can show that it was spent on healthcare.

Additionally you can opt to take out a loan on your 401k - you do repay the loan with interest but you are paying YOURSELF that interest.

My 401k is through Prudential, and like Fidelity it's very easy to take money out for an emergency, or even just a low interest loan for a new car, or whatever.

Good luck, hope things work out for you.

Originally posted by OptimusSubprime

Originally posted by Wrabbit2000
I'd say that before the economic unreality of modern times began ...starting about 2006/2007, 401k's were an outstanding idea and particularly if someone can leave it set without question for the entire period. Many employers had matching funds into 401k's as well, which was literally free money to help compound the money over time.

Then the whole system of what makes sense turned upside down and I wouldn't touch one for anything. The problem is, it's a good thing only because the people holding your money can invest and re-use it for a certain period of years...without doubt. So they're gonna make it hurt to about a 40% loss by the time it's all over, to get it.

In normal times, I think they make people good retirement money, but always...always..because someone higher up the food chain is making even more.

The only good thing about a 401k is the employer match, because as you said, it is free money. Other than that, the actual investments and funds that most 401s are invested in are not of the highest quality. it is for this reason that I tell people to close or roll over their old 401s when they leave a job

I have always self-directed my 401k and it has been very successful. Most 401k's will allow a self-directed account, and if you don't like mutual funds like me you can open a brokerage account within your 401k and buy regular securities.

My 401k has done very well, because I don't trust the banks to manage it so I do it myself. A little research and regular follow-up research can take your 401k from a dud to a big winner.

Thank you everyone for your responses. I have the feeling now that I just want to empty out my 401k.

To the person who asked who I have it is Fidelity. I also am fully vested. And I get 100% company match.

But I can't help but feeling so frustrated right now. I am in limbo waiting to see if I can get this money out and what makes me really mad is the fact they tax you on it.

I admit I am a financial illiterate , I always have been. But so, am I understanding correctly that the money I take out for a hardship loan will be taxed so that means I will have to take out much more than I actually need to pay the medical PLUS the taxes? It just seems so dumb to have to pay taxes on my own freaking money. Scam artists and crooks seems like to me..

In had a 401k and it was losing 300-700/ month despite money going in to the account. I got fed up and cashed out the account and used the money to pay down my credit cards and as a deposit dot our house. It feels weird not having that padding that I was used to having, but I'm also not sick to my stomach every time I get a statement in the mail.

Originally posted by Beldy
I admit I am a financial illiterate , I always have been. But so, am I understanding correctly that the money I take out for a hardship loan will be taxed so that means I will have to take out much more than I actually need to pay the medical PLUS the taxes? It just seems so dumb to have to pay taxes on my own freaking money. Scam artists and crooks seems like to me..

Yes, it's a problem being illiterate about a subject, isn't it? The only way you would pay taxes on your money is if it went in there tax free at the beginning, in which case why should you NOT pay taxes on it? You didn't before. The idea here is that if it goes in untaxed, when it comes back out you should be in a lower tax bracket, so you will wind up paying less taxes on it. In other words, this provision was done to HELP you.

But you changed your mind, and so it is working against you. I know it's DIRE, but you still changed your mind. If it's for medical you can wind up deducting the expense at the end of the year.

I have read in quite a few sources that a great deal of the US Debt is money loaned from the retirement funds of US citizens. If true that would make me very nervous about now.

If the US defaults, there goes your retirement money, all of it!

Since there seem to be some knowledgeable people in this thread, what are your views. Do you actually know where your money is being invested?

P

A loan should should be easier. If you don't already have one against your 401k.
Typically, they can loan about half of the 401k's current worth. The loan is not taxed, but you have to repay all of it to avoid taxes. There can be a processing fee, and a small interest amount on the loan, which you are paying back to yourself.. You should also be able to set the length of time to repay it. If you ever close the 401k, you pay taxes on whatever portion of the loan you have not re-payed.

Usually there is also a way to get emergency money. This is different than a loan. You don't pay it back to yourself, so you pay a tax, and perhaps a penalty. I've noticed that they HAVE made it harder to take emergency money from your fund. This takes longer, and they asked for all kinds of paperwork that shows the need for money.

I've taken money both ways. For medical bills.

One thing to remember about a loan is that you can only usually take one at a time. So make sure you get enough money to help yourself out. For me, the loan was just a matter of asking for it, I didn't need to prove that I needed it.

This info is just based on my personal experience!

reply to post by Beldy


I live in Australia and recent media articles from Politicians are saying because of the good medicines now days people can work into their late 70s. If a person reads between the lines of this message they are really saying please die at work so we dont have to pay you retirement benefits. The moral of the story is never rely on a superannuation scheme alone for retirement have some other income stream set up.

reply to post by Beldy


They make it hard because it's tax free.

I had to do the same. It wasn't "hard", but I'm sure it will suck at tax time.

Originally posted by schuyler

Originally posted by Beldy
I admit I am a financial illiterate , I always have been. But so, am I understanding correctly that the money I take out for a hardship loan will be taxed so that means I will have to take out much more than I actually need to pay the medical PLUS the taxes? It just seems so dumb to have to pay taxes on my own freaking money. Scam artists and crooks seems like to me..

Yes, it's a problem being illiterate about a subject, isn't it? The only way you would pay taxes on your money is if it went in there tax free at the beginning, in which case why should you NOT pay taxes on it? You didn't before. The idea here is that if it goes in untaxed, when it comes back out you should be in a lower tax bracket, so you will wind up paying less taxes on it. In other words, this provision was done to HELP you.

But you changed your mind, and so it is working against you. I know it's DIRE, but you still changed your mind. If it's for medical you can wind up deducting the expense at the end of the year.

Yes, it is. My dad sucked at finances he was always poor so I learned my financial ways from him. I would like to learn but I find the subject of finances incredibly boring. That's just me. And it's a problem. I guess I should hire a financial planner or someone who knows what they are doing because I sure don't. I could teach myself though.

Yea, it's for medical. Someone mentioned I could deduct the money from my taxes at the end of the year. That would help some.

Thank you for your response.

Originally posted by spacedoubt
A loan should should be easier. If you don't already have one against your 401k.
Typically, they can loan about half of the 401k's current worth. The loan is not taxed, but you have to repay all of it to avoid taxes. There can be a processing fee, and a small interest amount on the loan, which you are paying back to yourself.. You should also be able to set the length of time to repay it. If you ever close the 401k, you pay taxes on whatever portion of the loan you have not re-payed.

Usually there is also a way to get emergency money. This is different than a loan. You don't pay it back to yourself, so you pay a tax, and perhaps a penalty. I've noticed that they HAVE made it harder to take emergency money from your fund. This takes longer, and they asked for all kinds of paperwork that shows the need for money.

I've taken money both ways. For medical bills.

One thing to remember about a loan is that you can only usually take one at a time. So make sure you get enough money to help yourself out. For me, the loan was just a matter of asking for it, I didn't need to prove that I needed it.

This info is just based on my personal experience!

I already took out a loan so there goes that option. Unless somehow I can pay it off and get another one.
Which seems silly. But I'll look into that.

Thanks for your response.